The sanctions were imposed after Russia annexed the Crimea region from Ukraine last month.

Pro-Russian activists have taken over scores of government buildings in cities and towns across eastern Ukraine, though the Kremlin denies its forces are involved.

The activists have also taken hostages including international monitors.

Tens of thousands of Russian troops are stationed close to the Ukrainian border, and Moscow has warned that its soldiers will act if Russian interests in eastern Ukraine - where a majority of the population are Russian-speaking - are threatened.

The US and EU have accused Russia of failing to implement the terms of a deal agreed in Geneva aimed at defusing the crisis by disarming illegal militias.

They have both stepped up sanctions against Russia this week, naming more individuals and companies facing travel bans and asset freezes.

Moscow blames Kiev for the unrest and has condemned the sanctions

Further funds

The IMF bailout will also make available $1bn in loan guarantees from the US, which was recently approved by Congress.

"Today's final approval for the $17bn IMF programme marks a crucial milestone for Ukraine," said US Treasury Secretary Jacob Lew in a statement.

He added that the bailout will "enable Ukraine to build on the progress already achieved to overcome deep-seated economic challenges and help the country return to a path of economic stability and growth".

Earlier on Wednesday, an international conference in London ended with a commitment to help Ukraine recover tens of billions of dollars worth of assets which were allegedly stolen by the ousted President Yanukovych and his allies.